MAY 17, 2013
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Time to Act
With Congress looking at tax reform, it's crucial that credit union advocates deliver a clear message to their senators and representatives: Leave the credit union corporate income tax exemption alone!

  Growing Support for CUs: MBL Bill Introduced in Senate
U.S. Sen. Mark Udall reintroduced legislation that would raise the credit union member business lending cap to 27.5 percent of assets, from the current limit of 12.25 percent. The bill is similar to one introduced earlier in the U.S. House.

  House Financial Services Committee in High Gear
The House Financial Services Committee held a hearing on May 7 and addressed multiple issues, including reforms to the Dodd-Frank Act, amendments to the Jumpstart Our Business Startups (JOBS) Act, and others.

  On the Road to Tax Reform
A report on tax policy reform delivered to the Joint Committee on Taxation moves Congress closer to comprehensive tax reform, and takes note of the credit union income tax exemption.

  Be the Big Elephant in the Room: Tax Reform/Debt Ceiling Link Heightens Need for CU Vigilance
The possibility that tax-reform legislation could be tied legislatively with efforts to raise the federal debt ceiling underscores the need for credit unions to encourage their members to urge legislators to support the CU tax exemption.

  Nomination to NCUA Board
President Obama has nominated former Oregon State Sen. Rick Metsger to fill the seat on the National Credit Union Administration board that was left vacant when the term of former board member Gigi Hyland expired last year.

  Senate to Vote on Cordray Nomination Next Week
Senate Majority Leader Harry Reid said he would hold a vote next week on the nomination of Richard Cordray to continue as director of the Consumer Financial Protection Bureau, a nomination Republicans have vowed to block.

  In Savannah for the Three C’s: Convention, Content and Congress!
Last week's Georgia Credit Union Affiliates Annual Convention, with the theme "Lending a Helping Hand," focused on providing credit unions with ideas for future financial success.

  Growing Influence
Recent activities by Georgia credit unions and credit union chapters serve as examples of the way credit union people can reach out to elected officials, developing personal relationships and promoting the credit union message.

  Georgia CU Recipient of NCUA Award
Stateboro-based CORE Credit Union was one of 22 low-income-designated credit unions nationwide that were awarded NCUA grants to hire summer interns. The Student Internship Grant Initiative awarded a total of $80,000.

  CFPB Proposes Options to Ease Student Debt Repayment
The Consumer Financial Protection Bureau proposed several measures to ease the burden of student debt, including allowing borrowers in good standing to refinance their remaining debt at lower interest rates.

  Seeking Flexibility in Mortgage Disclosure Rule
CUNA and other trade groups thanked two U.S. Representatives for their help in urging the CFPB to change a provision in its proposed mortgage disclosure rules that could cause costly delays in closings.

Don't Tax My Credit UnionTime to Act

Credit unions across the country are getting involved in a new national advocacy campaign focused on ensuring the preservation of the credit union corporate income tax exemption as Congress contemplates comprehensive tax reform. The time to act is now, and this action is needed by credit union board/committee members, staff, and the 96 million members who rely on credit unions. This proactive effort is to ensure that credit unions are the one delivering a clear message to Congress, and that message is that Congress should not raise taxes on 96 million credit union members (and preserve a real financial choice for consumers).

How to get started? Simple: Access to learn more, obtain information to educate staff/volunteers/members, access videos and Twitter hashtags for social media campaigns, and most importantly take action now by sending an e-mail to Congress. When your team accesses the "take action" section, it automatically syncs with the existing call to action center, so if you have already registered in a previous call, you save a step and can log in with your e-mail address. This site can be easily linked to a credit union website to share with their members. It will take all of us working together to keep credit unions from being swept away in the tax debate.

This is just the first step in a nationwide call to action that will last for months while Congress is deciding which organizations should retain their tax exempt status, and which ones will not. Watch for additional information, and next week on Wednesday May 22nd CUNA will host a webinar to inform credit unions on this vital campaign. But please take the initial steps today:

  1. Share the call to action with all staff and board now to generate e-mail letters to Congress.
  2. Review the materials on the Don’t Tax My Credit Union website for possible use with your credit union’s website, Facebook account, and/or Twitter feed.
  3. Register for the webinar on Wednesday to learn more.

Additional materials to help educate members on the issue can be found here.

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FlowersGrowing Support for CUs:
MBL Bill Introduced in Senate

On Thursday, May 16th Sen. Mark Udall (D-CO) reintroduced legislation that would increase the credit union member business lending (MBL) cap to 27.5% of assets, from the current 12.25%-of-assets level. 

In a press release on the S. 968, the “Small Business Lending Enhancement Act of 2013,” Sen. Udall shared that the legislation is a common-sense bill that would cut red tape and allow credit unions to lend to more Main Street businesses than they do today.  This bipartisan legislation would increase the amount of business loans that well-capitalized credit unions are allowed to issue.

The MBL cap change would help credit unions lend an additional $13 billion to small businesses in just the first year after enactment. This money, which would be made available at no expense to taxpayers, would in turn help small businesses grow around 140,000 new jobs.  This bill is similar to one that was introduced in the House by Reps. Ed Royce (R-CA) and co-sponsor Carolyn McCarthy (D-NY) released early this year. That bill, H.R. 688, has 94 co-sponsors including three from Georgia:  Reps. Sanford Bishop (D-2), Hank Johnson (D-4), and John Lewis (D-5).

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RacingHouse Financial Services Committee in High Gear

Whenever the committees that focus on the financial services industry meet in Congress, it requires close monitoring, even if it is a hearing on just one bill. On May 7th, the House Financial Services Committee had an extensive schedule addressing multiple issues: They took another step toward reforming parts of the Dodd-Frank Act, amending the Jumpstart Our Business Startups (JOBS) Act and addressing some derivatives issues, marking up nine measures and moving them along to the U.S. House. Committee Chair Rep. Jeb Hensarling (R-TX) acknowledged that the changes "in some respects are modest," but said they were not insignificant in that they reduce "the sheer weight, volume, complexity, and uncertainty of federal rules and regulations.” Hensarling said in a release that two of the bills amend the JOBS Act, six would amend Title VII of the Dodd-Frank Act, and one would enhance the economic analysis performed by the Securities and Exchange Commission in carrying out its regulatory responsibilities. The Dodd-Frank Act changes would address unintended consequences of the derivatives provisions of those regulations. The nine committee-approved bills are:

  • A bill to amend a provision of the Securities Act of 1933 directing the Securities and Exchange Commission to add a particular class of securities to those exempted under such Act to provide a deadline for such action (H.R. 701);
  • The Holding Company Registration Threshold Equalization Act of 2013 (H.R. 801);
  • The Swap Data Repository and Clearinghouse Indemnification Correction Act of 2013 (H.R. 742);
  • The Financial Competitive Act of 2013 (H.R. 1341);
  • The Business Risk Mitigation and Price Stabilization Act of 2013 (H.R. 634);
  • The Inter-Affiliate Swap Clarification Act (H.R. 677);
  • The Swaps Regulatory Improvement Act (H.R. 992);
  • The Swap Jurisdiction Certainty Act (H.R. 1256); and
  • The SEC Regulatory Accountability Act (H.R. 1062).

The following week will be just as hectic, with multiple hearings scheduled ranging from examining the CFPB, how the Department of Justice prosecutes financial institutions, and possible regulatory relief measures. Stay tuned!

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RoadOn the Road to Tax Reform

A 550-plus page report on tax policy reform created by 11 House Ways and Means working groups and delivered to the Joint Committee on Taxation on May 6th mentions the credit union tax exemption as anticipated. On credit unions, the report states that:

"Credit unions are exempt from federal income taxation. The exemption is based on their status as not-for-profit mutual or cooperative organizations (without capital stock) operated for the benefit of their members, who generally must share a common bond." The report also notes that the definition of common bond has been expanded so more people can access credit unions. It continues: "While significant differences between the rules under which credit unions and banks operate have existed in the past, most of those differences have disappeared over time."

Upon release of the working groups' report, CUNA President/CEO Bill Cheney emphasized that preserving the credit union tax exemption is the highest priority. "However," he added, "the most effective way that we can do that is to ensure that our members and supporters, nationwide, understand the value that credit unions bring to their memberships and consumers at large and how the tax exemption plays a critical role for not-for-profit credit unions. We cannot take anything for granted – we urge credit unions to take action and tell the story to their members."

What’s next? Ways and Means Committee Chair Dave Camp (R-MI) and ranking member Rep. Sandy Levin (D-MI) called the full report an "important and comprehensive overview of the tax code, an overview of some of the most commonly referenced previous tax reform proposals and summarizes the views of more than 1,300 submissions offered to the Ways and Means Committee by key stakeholders." They pledged that the committee will "dig into its details over the coming weeks." The Ways and Means working groups accepted public comment until April 15, and prior to that deadline CUNA participated in a committee briefing on the credit union tax status, talking to four members of the powerful tax-policy committee and about 15 staffers, and also submitted a comment letter. Among the points emphasized about the tax exemption:

  • The economic benefits provide gains to tax-paying credit union members and other consumers that far outweigh any funds that would be brought in by imposing a federal income tax on credit unions;
  • While the Joint Committee on Taxation estimated the credit union "tax expenditure" meant $0.5 billion in unclaimed government revenues in 2012, credit unions gave $8 billion back to their members and other consumers in the form of low fees, low rates and other benefits;
  • A tax on credit unions is a tax on 96 million Americans who are their members; and
  • Credit unions provide full and fair service to all members – more than half of members who rely on credit unions for their primary financial services are middle-class Americans, bringing in annual incomes of $25,000 to $75,000.
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ElephantBe the Big Elephant in the Room:
Tax Reform/Debt Ceiling Link Heightens
Need for CU Vigilance

Reports that a key lawmaker cleared a path on May 8th for tax code reform debate by publicly backing the idea of linking an overhaul of the tax code to an increase in the debt limit truly highlights the need for credit unions to be vigilant in defense of their tax status right now. Credit unions are encouraged to educate their members – now – about the public policy value of the credit union federal tax exemption. House Ways and Means Committee Chairman Dave Camp (R-MI) and Senate Finance Committee Chairman Max Baucus (D-MT) have said they are ready to push ahead with efforts to revise the tax code. It was Camp who backed tying tax talks with debt-ceiling talks, which would create a package that would be harder to derail during the legislative process (see above article on tax reform).

The next several weeks will be key in terms of what actually goes into a tax reform bill in the House and that it is possible that the House could consider comprehensive tax reform legislation before the end of July. This is a critical time for credit unions to educate their members and encourage them to contact lawmakers to express their support for the value they receive from the credit union tax exemption; credit unions must use every chance possible to tell lawmakers loudly, early and often that a tax on credit unions is nothing more than a tax on 96 million Americans who are credit union members.

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Nomination to NCUA Board

Former Oregon State Sen. Rick Metsger (D) has been tapped by the White House to fill the vacant seat on the three-member National Credit Union Administration board. Nominated May 15th by President Barack Obama, Metsger, if confirmed by the U.S. Senate, will fill the seat vacated late last year after the term of board member Gigi Hyland expired.

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CapitolSenate to Vote on Cordray Nomination
Next Week

According to press reports, Senate Majority Leader Harry Reid (D-Nev.) said on May 15th that he will hold a vote next week on the nomination of Richard Cordray to continue as director of the Consumer Financial Protection Bureau.

The vote is not expected to succeed since 43 Republican senators have pledged to block the confirmation of any CFPB director nominee unless the bureau’s structure is reformed. The Senate Banking Committee approved the nomination March 19 by a 12-10 party-line vote.

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In Savannah for the Three C's: Convention, Content and Congress!

3 CsLast week credit union leaders around the state gathered in Savannah for the 2013 GCUA Annual Convention. With the theme "Lending a Helping Hand" resonating throughout the convention, participants heard from a myriad of speakers to gain ideas that will help propel credit unions successfully into the future. Topics ranged from energized lending programs, the future landscape of mobile payments, board governance, risk management, how to connect with youth for membership growth – all designed to help credit unions help members achieve financial success. The week was a whirlwind of information that can benefit any credit union.

This year credit unions heard from U.S. Congressman Jack Kingston (R-1), who addressed the full session on Friday afternoon following a region-wide industry overview by NCUA Director Herb Yolles, and state-wide industry overview by Georgia Department of Banking and Finance Commissioner Rob Braswell. Rep. Kingston, who resides in Savannah when not in Washington. D.C., addressed the group just days after announcing his intention to run for the U.S. Senate seat that will be vacated by U.S. Sen. Saxby Chambliss (R). Rep. Kingston shared his insight with the group on the issues impacting Georgians that are to be addressed in Congress as well as the financial industry bills that have passed and/or are in process. The highlight however was the amount of time that Rep. Kingston spent after the session was concluded to connect personally with the credit union leaders. This opportunity to engage with a legislator and discuss the importance of the industry grows the influence of all credit unions!

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GrassGrowing Influence

Legislators hear from multiple industries, and hear messages much different from that which credit unions share, and it is your voice, which represent your members, which must be heard. It is important for people in credit unions to engage with their legislators as these are the individuals who can decide how you serve your members. In the past few weeks, credit union leaders have engaged with legislators all across the state, growing the influence for each and every credit union:

On May 13th the Southeast Credit Union Chapter hosted State Senator William Ligon (R-Brunswick) for the third consecutive year at their meeting following the state legislative session. By repeatedly engaging with State Sen. Ligon year over year, the Chapter has grown his awareness of credit unions and the issues that are important to the industry have grown tremendously. Sen. Ligon shared his perspective on the state session and the stance of bills that were positive to the credit union industry that passed (and those that Ligondid not that could have had negative consequences). But it is the time spent around the meeting that adds a personal connection – if your chapter hosts a legislator, please interact with them as it is the small steps that build a strong relationship. Our thanks to the Southeast Chapter for having their local senator as part of their annual agenda!

Positive relationships are an output of consistently engaging with a legislator, as well as having an understanding, and an appreciation for the industry. This was demonstrated in Augusta as U.S. Rep. John Barrow (D-12) recently reached out to area credit unions proactively to engage on issues. Meeting with the credit unions on May 2nd, and dropping by different credit union branches in the district, illustrates not only the awareness that Barrow has of the industry, but of the importance credit unions play in his district. Curious on how you have your legislators contact you for input on issues? This type of relationship and personal meetings do not happen overnight. It was the culmination of consistent engagement of the Augusta area credit unions on the political scene. This is done through attending GACs, Hike the Hills and Hike at Homes, and being active in the local political community; regular interaction with their elected officials. Our thanks to the Augusta area credit unions for establishing strong personal relationships with their Congressman!

Delta - Polish visitOpportunities to build relationships and grow credit union influence are all around – one only needs to look and take the time to make a connection. On May 7th Delta Community CU capitalized on that opportunity by bringing visitors from their Polish partner credit union SKOK Jaworzno Credit Union to the state Capitol. In the process, they met with State Sen. Steve Henson (D-Tucker) who welcomed the credit unions and painted a picture of Georgia politics. Engaging with legislators builds awareness, it builds a personal relationship, and it creates understanding. And personal relationships are the best means of ensuring that the credit union message is strongly considered by legislators. Our thanks to Delta Community CU for growing a personal connection!

Growing influence does not happen overnight; it is a systematic process of engaging with legislators wherever possible and making a personal connection when the opportunity arises. This is a vital activity as legislators need to understand precisely what makes credit unions unique, and their unique needs,  especially as they vote on issues that can change the way ANY credit union can operate. Time spend establishing a personal relationship with legislators create understanding, and increases the likelihood that they will listen on the issues of industry importance.

Are you growing influence with your elected officials? The time you spend developing a personal relationship with our legislator is an investment in your credit union’s future!

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WinnerGeorgia CU Recipient of NCUA Award

In the last edition of Creating Influence the NCUA grant program to fund summer internships was shared. We are pleased to announce that NCUA on May 8th awarded $80,000 in grants to 22 low-income credit unions under the Student Internship Grant Initiative, including CORE CU from Statesboro, Georgia!

The Student Internship Grant Initiative provides eligible low-income designated credit unions with up to $4,000 in funding for hiring student interns for the summer. The students hired will participate in a variety of tasks, including implementing marketing plans, ensuring compliance and assisting with the credit union’s operations. "A Student Internship Grant makes several good things happen," NCUA Board Chairman Debbie Matz said. "It provides students with paid work experience and introduces them to credit unions. It also gives credit unions a chance to add some helping hands and to connect with young people, who could be future members or industry leaders." Twenty-two low-income credit unions in 16 states received grants. Our congratulations to CORE CU!

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CFPB Proposes Options to Ease Student Debt Repayment

Student debtConsumer Financial Protection Bureau Director Richard Cordray recently outlined a trio of potential policy and market-based solutions that he said would "help struggling borrowers with unmanageable private student loan debt." The student debt solutions were unveiled during a May 8th field hearing in Miami. The potential actions, which were developed through suggestions from outside commenters, include:

  • Allowing student loan borrowers who have dutifully repaid their loans to refinance their remaining debt at lower interest rates;
  • Lowering monthly repayments to match a negotiated debt-to-income ratio; and
  • Cleaning the slate and creating a payment plan for borrowers who need a way to repair their credit and get out of default.

A comprehensive CFPB student debt report released during the hearing found that:

  • Americans hold approximately $1.1 trillion in outstanding student loan debt,
  • One in five U.S. households have at least one resident who has taken out a student loan,
  • The average outstanding balance for student loan borrowers is $26,682,
  • One in eight student loan borrowers owes more than $50,000,
  • Thirty percent of student loan borrowers are delinquent, and
  • A total of 6.7 million are more than 90 days behind on their student loan payments.

On the same topic, Sen. Elizabeth Warren (D-MA) recently introduced legislation that aims to address student loan issues. Her bill, the Bank on Students Loan Fairness Act (S. 897), would offer federal student loans at the same rates that are charged to banks through the Federal Reserve discount window. That rate is currently .75%.

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DisclosureSeeking Flexibility in Mortgage Disclosure Rule

CUNA and several other trade groups sent a joint letter on May 15th, to Reps. Steve Stivers (R-OH) and Ed Perlmutter (D-CO) thanking them for their help in urging the Consumer Financial Protection Bureau to adjust a provision in its proposed mortgage disclosure rules that could cause costly delays in closings.

The provision requires that borrowers receive their final closing disclosure three business days prior to closing, and that if a cost that the borrower must pay to close increases during that time, a new statement and waiting period must be initiated.

Because changes frequently occur in the three days prior to a closing, the three-day-restart provisions can reduce consumers' ability to make changes to their purchase, put their mortgage rate lock at risk and even cause their purchase contract to expire, the trade groups explained. Reps. Stivers and Perlmutter, both members of the House Financial Services Committee, have asked fellow Representatives to cosign a letter to the CFPB urging more flexibility in the rule. Read the trade group letter.

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